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Codebreaker

The Justice Department gears up for a battle against Apple and e-book publishers.

Marc Sanchez Mar 8, 2012
Codebreaker

The Justice Department gears up for a battle against Apple and e-book publishers.

Marc Sanchez Mar 8, 2012


Before Apple execs could finish patting each other on the back for their performance at the new iPad unveiling, rumors started swirling that the DoJ plans to sue them over e-book pricing. Problems for Apple and other e-book publishers started to pop up around the release of the first iPad back in 2010. In order to get a book into the iBook store, then on to the fancy, new, shiny iPad, publishers were asked to sign an “agency pricing” contract, which basically said that publishers could set the price of their books, and Apple would skim 30% off the top for the “privilege” of getting the book on the iTunes sales floor. So far so good.

The contract also stipulated that titles could not be sold elsewhere for less than the publisher was going to sell it on iTunes. What this does, potentially, is raise the price of e-books for you, because when the next Stephen King book comes out and sells for $15.99 on iTunes, you’re not going to find it on sale at, say, Amazon for $9.99, which is what Amazon likes to do (take a loss on selling you one thing, then keep you shopping to buy more things).

The Wall Street Journal reports: “The Justice Department believes that Apple and the publishers acted in concert to raise prices across the industry, and is prepared to sue them for violating federal antitrust laws, the people familiar with the matter said.” Publishers argue that agency pricing fosters competitiveness, since no one store can have the advantage of selling a book for less than another. It’s pretty easy to see, though, how a publisher might raise the price of a book by a couple bucks to make up for Apple’s cut, knowing people will have to pay that price no matter what.

If you’ve made it this far, you deserve a Calgon break. Take me away…

 

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